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Export-Import Bank gives while other agencies take

Fred Hochbert, president, Export-Import Bank

New figures show one agency had a banner year. The Export-Import Bank, which lends
money to American companies that do business abroad, had a record number of
transactions in fiscal 2012.

Fred Hochberg, the Export-Import Bank president told The
Federal Drive with Tom Temin and Emily Kopp there were two good reason
for the bank's success.

"One, we're on an export upswing," he said. "Exports topped $2.1 trillion last
year. Never have we done more exports than we did in 2011. And two, the other
thing that's not as good is the financial markets are still kind of weak. So, one
of the reasons we've had to step in is to make sure we keep those exports going
and the jobs being created. We need to step in sometimes and help finance those
exports."

Fred Hochberg, president, Export-Import Bank

The bank is not subsidized; rather, it collects a fee for the work it does, which
covers all of the agency's administrative costs and loan-lost reserves. "On top of
that, in fiscal 2012, we sent the Treasury $1.1 billion," Hochberg said. "Subsidy
usually means you get something from the government. We actually contribute to the
government."

While the Export-Import Bank is able to offer low-interest loans like other banks,
its loans are backed by the "full faith and credit of the U.S. government,"
Hockberg said.

"We did almost $36 billion worth of approved loans and most of those loans go to
foreign buyers so that they can buy U.S. goods," he said. "Very few of them
actually go to U.S. companies. Most of them go to their customers."

Bright future ahead for U.S. exports

Looking down the road to the next four or five years, Hochberg expects to see the
large upswing in exports to continue.

"We make a difference in two areas, long-term loans and small business," he said.
"Those two areas I believe are going to still have trouble getting lending from
banks for quite some time to come.

According to the 2012 Annual Report, the bank has not only been posting good
numbers, its employees are more productive as well.

Part of the workforce's success is its collaborative nature. "People have found a
lot of shortcuts," Hochberg said. "We've eliminated things like Credit Committee,
so the career staff of the bank can approve loans up to $10 million. There's a
process for that, but the point is, we've delegated more authority to our
employees and we've tried to therefore cut cycle time."

Using this process, the bank has been able to process 98 percent of all loans
within 100 days and 90 percent within 30 days.

Helping business succeed overseas

The bank's role is to help companies that are having a difficult time finding
financing due the nature of the products they produce — satellite, nuclear
power plants or large commercial aircraft — or the countries they are
selling products to.

"U.S. companies are sometimes selling to countries that are hard to finance into,"
Hochberg said. "Kazakhstan, South Africa, Colombia, these are more difficult
markets for banks to be comfortable in. So, we try to fill the gap on products
that are hard to finance and countries that are hard to finance."

The Export-Import Bank conducts extensive credit reviews of its customers and
reports its default rates to Congress every 90 days. "Our defaults right now are
running about one-third of 1 percent," he said.

Currently, the bank operates in 178 countries and is waiting for the State
Department and President Obama to make a decision about whether it can begin doing
business in Burma.

"There's certainly a keen interest in Burma," Hochberg said, but added the "real
action" for U.S. exports is in emerging markets like India, Turkey, China, South
Africa and Mozambique.

"I think a lot of those countries are going to be still growing strong," he said.
"Some of the fastest growing countries in the world today are actually in South
Africa and Sub-Saharan Africa."

What makes Hochberg optimistic about the emerging markets is the growing middle
class in those countries, something key he said U.S. businesses should be building
their exports on.

"Why I'm so optimistic and bullish is the continuing emergence of the middle class
globally," he said. "We're looking at more than a billion additional people
entering the middle class by the end of this decade."

All of the bank's good news and optimism comes in the wake of a bumpy
authorization
process that wrapped up last May, when President Obama signed the bank's three-
year re-authorization.

"At the end of the day, that was a bipartisan agreement but a hard-fought
agreement," Hochberg said. "Partly, we're having a little bit of a debate in this
country of what is the role of the government? Does government have a role in
helping create jobs and helping businesses succeed. That was partly what that
debate was about last spring."